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Court restores local zoning rules for shale gas drillers in Pennsylvania

| Thursday, July 17, 2014, 1:50 p.m.

An appeals court on Thursday curbed the state's power over local zoning rules that target the growing gas-drilling industry but upheld parts of Pennsylvania's revamped oil and gas laws involving notification of spills, eminent domain and medical records.

Commonwealth Court restored “the authority that local zoning boards and the Court of Common Pleas holds in reviewing zoning challenges,” said Bucks County attorney Jordan Yeager, who helped represent seven communities that sued the state. “Those are rules that every other industry and property owner must play by.”

The ruling clears up the final four disputed sections of Act 13 of 2012, which lawmakers passed in an attempt to standardize rules for drillers and the state Supreme Court trimmed back as overreaching.

“It gives us some definition of what we can do and what we can't,” said Andrew Schrader, chairman of the supervisors in Cecil, one of the townships that sued. “We'll be able to go ahead and write our ordinances.”

A spokesman for Gov. Tom Corbett's Office of General Counsel said the ruling “speaks volumes to the constitutionality of state regulation of oil and gas activities.”

“We thank the court for their deliberation of the issues presented, and we look forward to continuing to make Pennsylvania the nation's leader in promoting responsible, protective development of natural gas,” spokesman Joshua Maus said in an email.

An industry lobbying group said the decision does not change its relationship with communities, some of which challenged the law.

“As we did prior to enactment of Act 13 and have done during this period of review, Pennsylvania's natural gas industry will continue to work collaboratively with the communities in which we operate to ensure shale development moves forward and we continue to realize the benefits at the local level and statewide,” the North Fayette-based Marcellus Shale Coalition said in a statement.

Act 13 included uniform land-use and environmental rules and imposed impact fees that the state collects from well owners and distributes to local governments. It was Pennsylvania's first attempt at managing the rush to drill in the gas-rich shale play that produces 18 percent of the country's natural gas.

The Supreme Court in December declared parts of the law unconstitutional and told Commonwealth Court to decide remaining issues. Most notably, the high court struck down rules limiting local ability to regulate drilling.

The parties — South Fayette, Peters, Cecil and Mt. Pleasant, and several state agencies — agreed not to debate the impact fees or most of the environmental rules.

Commonwealth Court's five judges split on the last zoning issue. The majority rejected an argument that the state Public Utility Commission could withhold Act 13 money from municipalities that enacted rules impeding drilling.

“Local zoning matters will now be determined by the procedures set forth under the (Municipalities Planning Code) and challenges to local ordinances that carry out a municipality's constitutional environmental obligations,” President Judge Dan Pellegrini wrote.

The PUC initially withheld impact fee money from communities that passed rules limiting drilling but eventually released it. Well owners have paid the state more than $600 million in impact fees in three years.

“Clearly, there was a hope by the industry that they could utilize the PUC as a hammer to bully municipalities into allowing drilling to happen everywhere,” Yeager said.

Maus said the state was “evaluating the impact” of this part of the ruling.

The judges ruled against the challengers on three issues.

They rejected an argument that Act 13 improperly gives drillers the right to take property by eminent domain. The ruling said state law allows companies to take land for storage or transportation of gas if they're licensed by the PUC as public utilities.

Downtown attorney Jonathan Kamin, who represents the townships, said some companies involved in drilling have that designation.

“We remain concerned that the state has given eminent domain rights to a private company for private business,” he said.

Sunoco Logistics L.P. applied for public utility status to overcome challenges to the gas-liquids pipeline it wants to build from Western Pennsylvania to Philadelphia. The PUC is reviewing the application.

The judges agreed with the state that the Department of Environmental Protection needs to notify only public water systems about spills, although it could try to notify people with private wells.

“We appreciate the court's acknowledgement that, even though it is not required to do so, the Department of Environmental Protection takes action upon notification of a spill to protect and aid private well owners in getting alternative water supplies,” Maus said.

The law's rules that keep secret some information about what chemicals drillers use do not harm doctors' ability to share information on medical treatment, the court ruled.

In response to Act 13 and other issues, DEP proposed regulations governing surface activities around drilling. Those remain under review, and DEP is adjusting them based on language in a fiscal code that lawmakers passed this month, which split the rules for shallow and deeper wells. DEP expects the rules to become final next year.

“For us, this is a reminder that (the DEP) really needs to get the regulations out from Act 13,” said Davitt Woodwell, president and CEO of the Pennsylvania Environmental Council. “We need those regulations on the street.”

David Conti is a staff writerfor Trib Total Media. He canbe reached at 412-388-5802 or dconti@tribweb.com.

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